The question of which pathways regulate the differentiation of the stratified epidermis has been central to epithelial biology. Transcription is one of the most important regulatory mechanisms controlling the stepwise program of epidermal differentiation. Epidermis has been used as an excellent model for studying the process of cellular differentiation because the cells form a stratified structure during development, and each stratum is easily identified by morphology and expression of specific markers. Our research effort have focused in characterizing the regulation and function of Dlx3 homeobox transcription factor, a member of the murine Dlx family, with essential roles in epidermal, osteogenic and placental development. Transgenic temporal and spatial mis-expression of Dlx3 in the pre-differentiated basal layer caused an abnormal skin phenotype, characterized by cessation of proliferation and premature differentiation of the basal cells judged by the upregulation of expression of late differentiation markers such as loricrin and filaggrin. We are assessing the role of Dlx3 in modulating the cell cycle during the epidermal differentiation process using cultured keratinocytes and mouse models with inducible-ectopic expression of Dlx3. Recent results have also indicated that epidermal deletion of the Dlx3 homeodomain transcription factor leads to disruption of the barrier formation and is linked to the development of an inflammatory response characterized by the accumulation of IL-17-producing CD4(+) T, CD8(+) T, and &#947;&#948; T cells in the skin and lymph nodes. The gene expression signature of this conditional mouse model shared features with lesional psoriatic skin, and Dlx3 expression was markedly and selectively decreased in psoriatic skin. Utilizing a mouse model we are studying the effects of endogenous excess of retinoic acid on developing skin and the molecular and cellular events that lead to defects in skin morphology and differentiation. In an effort to understand the cellular and molecular processes involved in human pathologies associated with abnormal skin development and barrier dysfunction, we studied the role of Retinoic Acid (RA) in periderm desquamation, embryonic skin differentiation and barrier formation. While excess exogenous RA has been known to have teratogenic effects, little is known about the consequences of elevated endogenous retinoids in skin during embryogenesis. We showed that absence ofCyp26b1, a retinoic acid-degrading enzyme, results in aberrant epidermal differentiation and filaggrin expression, defective cornified envelopes and skin barrier formation, in conjunction with peridermal retention. We show that these alterations are RA-dependent since administration of exogenous RA in vivo and to organotypic skin cultures phenocopy Cyp26b1-/- skin abnormalities.Our results establish a close relationship between stratum corneum maturation, skin barrier formation, periderm retention and how alterations in the interplay of these processes may lead to consequential pathologies of the skin.